Loan Amortization Calculator

How the loan amortization calculator works

For a fixed-rate installment loan, the scheduled payment uses the formula payment = principal x monthly rate / (1 - (1 + monthly rate) raised to -months). At a 0% rate, principal is divided evenly by the number of months. The term can be entered in years or months.

The schedule then calculates each month's interest from the remaining balance. The rest of the payment reduces principal. An optional extra amount is added to the scheduled payment and assumed to go directly to principal. Results include payment, interest, total paid, and payoff duration. Only the first 12 rows and final row are displayed to keep the page usable. Fees, daily interest, changing rates, and lender-specific rounding are not included.

Who should use an amortization calculator

This tool is for someone reviewing a fixed-rate installment loan with equal monthly principal-and-interest payments. It can provide an initial estimate for a personal loan, auto loan, or another standard installment balance. It is not designed for revolving credit, variable rates, interest-only periods, or balloon payments.

Use the amount being financed, annual interest rate, and full term. If you are reviewing an existing loan from today forward, a payoff calculator may be more suitable because it starts with the current balance and current payment rather than reconstructing the original scheduled payment.

Understand principal and interest

Principal is the amount borrowed. Interest is the cost estimated from the unpaid principal and rate. With a level-payment loan, the payment can remain the same while its parts change. Early payments generally contain more interest because the balance is larger.

As principal falls, the estimated monthly interest falls too. More of the same payment can then reduce principal. The breakdown section shows total principal and estimated interest, while the compact table shows this shift for the first 12 payments and the final payment.

How to read total paid

Estimated total paid equals principal plus modeled interest. It does not include origination fees, late charges, insurance, taxes, or other costs outside the amortized balance. A financed fee may already be included if it is part of the loan amount you enter.

The scheduled payment card excludes the optional extra amount so you can see the calculated contractual-style payment. The schedule uses that payment plus the extra amount. Its payoff duration and total interest therefore change when the extra field changes.

Extra payments and principal

An extra payment can shorten the schedule only when it reduces principal. Confirm how the lender applies additional money. Some systems may advance a due date instead, and some contracts may include a prepayment charge or minimum finance amount.

The calculator assumes the same extra payment every month from the beginning of the schedule. If the amount starts later, changes, or is skipped, the actual payoff will differ. For an existing loan, update the balance and use a payoff comparison based on current information.

Why lender figures may differ

A lender may calculate interest daily, use exact payment dates, round each transaction, or include fees. This page uses a monthly mathematical model. Even small timing and rounding differences can change the final payment or shift the payoff by a short period.

Review the loan disclosure for the annual percentage rate, interest method, and included charges. The note rate used here may not capture every cost represented by an APR. Request an official schedule or payoff quote when exact account figures are required.

Common amortization mistakes

Do not mix years and months, use a percentage as a decimal, or add taxes and insurance to the principal-and-interest payment. Avoid assuming that every fixed monthly bill is a fully amortizing loan. Promotional plans and balloon loans can follow very different rules.

Also remember that a lower payment created by a longer term can increase total interest. Compare payment size, total paid, and duration together rather than relying on one result.

Important limitations

This estimate assumes a fixed rate, monthly payments, and no missed payments or new charges. It does not recommend a loan or repayment strategy. Actual lender calculations and processing may differ, so review the agreement or contact the lender before making a financial decision.